In the previous part of the article, I answered the question why the cue ball is growing at all, the movements of which are repeated by all other crypto-assets. Why cryptocurrencies are in demand and what to expect from halving. If you have not yet had time to familiarize yourself with this material, follow the link https://www.binance.com/ru/feed/post/938677?ref=36346500&utm_medium=web_share_copy.

And in this part of the article we will talk about how cryptocurrencies help crypto users and companies, what potential the cryptocurrency market has, and most importantly, we will answer the question: is it worth investing for the long term?

Cryptocurrencies help escape from regulators

In 2022, the market faced the consequences of the incompetence of financial regulators. For example, amid the coronavirus crisis, America desperately printed dollars as part of the quantitative easing policy, and then suddenly (not) faced inflation. Now the US is raising interest rates to cope with the consequences. Agree, there is reason to doubt the competence of regulators.

Source: https://tradingeconomics.com/united-states/interest-rate

This may be why, even despite the height of the crypto winter, JPMorgan recorded an increase in the number of Americans who have invested in crypto at least once in their lives.

The share of US adults who have ever transferred funds to a cryptocurrency-related account increased from 3% before 2020 to 13% as of June 2022.

Specialists from the financial conglomerate analyzed a sample of 5 million accounts with a monthly transaction volume of at least $1,000. They identified transfers of funds to and from cryptocurrency platforms.

Analysts found that most retail users first invested in digital assets at the peak of prices. They noted that this behavior correlates with traditional markets.

Weekly number of new crypto users and Bitcoin price chart:

Over the past few years, the inflow of retail investor money into crypto accounts has far exceeded the outflow from them. The flow of funds has become more balanced amid the market decline in the first half of 2022.

Cash flow to and from crypto accounts:

By age, the researchers found that the largest share of crypto investors is among millennials - 20% versus 11% among Generation X and only 4% among baby boomers. Across all groups, men are more involved in the new asset class.

Share of investors in cryptocurrencies by generation and gender:

JPMorgan analysts noted that high-income Asians are most likely to invest in cryptocurrencies.

At the same time, as the researchers found, the amount of investment from users is relatively insignificant. The average transfer volume to crypto platforms since mid-2015 has been about $620, which is approximately equal to a week’s salary. Almost 15% of investors invested more than their monthly earnings in digital assets.

Returning to the interest in cryptocurrencies regarding price movements, analysts noted that most investors with low incomes were buying at higher prices.

For example, the average price for purchasing the first cryptocurrency among millennials in this category is $45,500, and among the wealthiest peers it is $42,400. This trend is characteristic of all generations.

Average Bitcoin purchase price by generation and income level:

At the same time, in August 2022, Pew Research Center analysts found that almost half of the Americans surveyed were dissatisfied with the profits from crypto investments. Analysis of Bitcoin behavior suggests that respected respondents were not focused on long-term investments.

In other countries, things are also not very good in the traditional financial market. For example, 2022 brought into the lives of Russians such terms as the currencies of friendly and unfriendly countries (for example, the dollar), as well as currency restrictions (for example, you cannot withdraw currency that was credited to accounts after March 9, 2022). Here is the choice left to the Russians:

  • Store currency digitally and pay huge fees to banks.

  • Keep your savings in rubles and pray that the money does not turn into candy wrappers.

  • Cryptocurrency.

Many chose the latter option. The reluctance to rely on “friendly” currencies has prompted many Russians to study crypto-alternatives. The digital asset market has tools that help circumvent restrictions in the financial market. For example, #стейблкоин #Tether (USDT) became a crypto-alternative to the dollar. Its exchange rate is pegged to the US dollar in a 1:1 ratio.

Even under sanctions pressure, USDT can be bought for rubles, sent anywhere in the world and, if necessary, subsequently exchanged back for “wooden” money. At the same time, storing stablecoins and other cryptocurrencies in a cold wallet ensures protection of assets from regulators.

Statistics on purchases of #биткоина for rubles indicate that the local peak of Russians’ interest in cryptocurrency occurred at the beginning of 2022 – a period of intensification of the conflict between the Russian Federation and Ukraine.

Source: https://coin.dance/volume/localbitcoins/RUB

Conclusions: Cryptocurrencies help to bypass regulatory prohibitions and save savings from the negative impact of incompetent decisions of the authorities.

Let's summarize the results of two large reviews

1. Features of the nature of cryptocurrency. We found out that Bitcoin is literally programmed to grow. The mistakes of traditional financial regulators and people’s fatigue from being controlled will contribute to the growth of the crypto community and support the positive dynamics of cryptocurrencies.

If you don’t understand what we’re talking about, I’ll once again leave a link to part 1 of the review https://www.binance.com/ru/feed/post/938677?ref=36346500&utm_medium=web_share_copy. Or just look for the first part on my blog

2. Demand for cryptocurrencies. Research shows that cryptocurrencies remain a popular tool even during a crisis.

3. Potential for the development of the digital assets market. The combination of advantages of cryptocurrencies over traditional fiat suggests that the cryptocurrency market will develop.

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Link to sources:

US dollar issue https://techstartups.com/2021/12/18/80-us-dollars-existence-printed-january-2020-october-2021/

Interest rate increase https://tradingeconomics.com/united-states/interest-rate

Americans are investing in crypto https://www.jpmorganchase.com/institute/research/financial-markets/dynamics-demographics-us-household-crypto-asset-cryptocurrency-use

Pew Research Center analytics https://www.pewresearch.org/fact-tank/2022/08/23/46-of-americans-who-have-invested-in-cryptocurrency-say-its-done-worse-than- expected/

Ban on currency withdrawal https://cbr.ru/press/event/?id=14059